Luke enjoys eating tuna sashimi and drinking Pepsi.His consumer equilibrium occurs where his budget line
A) just touches the lowest indifference curve at one point.
B) just touches the highest indifference curve at one point.
C) touches every indifference curve.
D) is below every indifference curve.
E) More information about Luke's budget is needed to determine his consumer equilibrium.

Question

Quizplus · Accepted Answer

Luke's consumer equilibrium occurs where his marginal utility per dollar spent is equal for both goods. This happens where the budget line just touches the highest indifference curve at one point, as this is where he is maximizing his total utility given his budget constraint.

Luke Enjoys Eating Tuna Sashimi and Drinking Pepsi